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It's looking like the June policy meeting when the Fed will officially signal it's set to begin...

It's looking like the June policy meeting when the Fed will officially signal it's set to begin tapering asset purchases, according to Jon Hilsenrath. Yesterday's lukewarm jobs reports removed pressure to act right away, but the prerequisite necessary to cut back QE - an improving economy - has been met.
Comments (36)
  • caupachow
    , contributor
    Comments (462) | Send Message
     
    I'll believe it when I see it.
    8 Jun 2013, 08:06 AM Reply Like
  • Joe2922
    , contributor
    Comments (432) | Send Message
     
    Most of the smart people know there will be a lot less mbs and Treasuries for sale so the Fed must taper, and Ben always warns first, "transparency". Meanwhile, The Mother of All Tops is forming!
    Details: http://bit.ly/WpVqYk
    8 Jun 2013, 12:18 PM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    That squares with shortage of good collateral http://seekingalpha.co...
    8 Jun 2013, 12:27 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (991) | Send Message
     
    Exactly.

     

    I'm pretty certain that at this exact moment in time, NO ONE knows exactly when "tapering" will begin. That includes Ben Bernake himself. I think what Bernake tried to do when he spoke to congress a couple of weeks ago was to JUST lay the groundwork for the discussion to begin. Nothing more. However, as what normally happens, the market completely overreacted and started screaming like the whole house was on fire. Think about it. Is the economy significantly better then it was 6 or 12 months ago? Marginally, at best. Therefore, to expect any kind of drastic Fed action before the end of the year is foolish. It wouldn't surprise me if we are all sitting here having this exact conversation a year from now. If there is one thing that has been proven, it's this - the Fed will do what the Fed needs to do until we start to see significant strength from this economy. I just don't think we are even close to that yet.

     

    Just my .02
    8 Jun 2013, 12:39 PM Reply Like
  • Viper740
    , contributor
    Comments (338) | Send Message
     
    Let me guess.....you're long on gold?
    9 Jun 2013, 02:31 AM Reply Like
  • dragos2901
    , contributor
    Comments (74) | Send Message
     
    Oh, it will happen. Fed launching head first into this one proves they are dead sure about it. Otherwise why risk market turmoil for nothing? Furthermore, I think they also have a timetable- it will just be unprofessional of them to first start a discussion without having a material accord. So, don't bank it will not happen by The Labour Day.
    9 Jun 2013, 08:58 AM Reply Like
  • bjamesh
    , contributor
    Comments (128) | Send Message
     
    Of course when this does begin, the spotlight for economic growth policies will shift to the elected houses who, apparently, have exhibited something close to paralysis while the Federal Reserve's plans have evolved. So there will be a transition from one arguably dysfunctional policy to policies created by dysfunctional government representatives.

     

    What could possibly go wrong?
    8 Jun 2013, 08:41 AM Reply Like
  • AZ Desert Trader
    , contributor
    Comments (249) | Send Message
     
    This sums it up fairly well.
    8 Jun 2013, 09:31 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1159) | Send Message
     
    It is only because the Fed has facilitated their irresponsible behaviours. Had the Fed stepped back and forced Congress and the administration to deal with this matter it would have been taken care of a long time ago.

     

    Politicians are more than happy to let somebody else do the heavy lifting. If the policy fails, then the politicians have someone to scapegoat and point fingers at. They will only do what they have to do when you hold their feet to the fire.

     

    Bernanke, an unelected bureaucrat, has stupidly been stepping into the breach and letting the politicians off the hook with his QE for far too long.
    8 Jun 2013, 11:06 AM Reply Like
  • wmateri
    , contributor
    Comments (554) | Send Message
     
    It was starting to look like the rally was getting carried away, so it was necessary to reign it in with words. This is the exact reverse strategy to 2010-12 when Hilsenrath was used to pump the market up whenever it fell too rapidly. No actual news or action required.
    8 Jun 2013, 08:57 AM Reply Like
  • SMaturin
    , contributor
    Comments (2305) | Send Message
     
    Jon Hilsenrath.

     

    Ben Bernanke's Vanna White.

     

    Same poise, same credibility, 30% less filling.
    8 Jun 2013, 10:01 AM Reply Like
  • wyostocks
    , contributor
    Comments (8906) | Send Message
     
    An improving economy where?
    Is not getting worse the equal to "improving"?
    8 Jun 2013, 09:02 AM Reply Like
  • samooh
    , contributor
    Comments (12) | Send Message
     
    so we can expect dow goes south to 12000
    8 Jun 2013, 09:38 AM Reply Like
  • EMS
    , contributor
    Comments (582) | Send Message
     
    When ?
    8 Jun 2013, 10:04 AM Reply Like
  • AllStreets
    , contributor
    Comments (1185) | Send Message
     
    What happened to 6.5% unemployment and 2% inflation as the criteria?
    8 Jun 2013, 09:55 AM Reply Like
  • wmateri
    , contributor
    Comments (554) | Send Message
     
    I suspect that Bernanke is listening to the internal arguments talking about the potential dangers of stimulating too much and too long. If the Fed doesn't actually start tapering soon, it will at least start preparing the ground for tapering. Is this simply a result of the new more "open" Fed or are they sending a message to those who have ears to listen?
    8 Jun 2013, 10:17 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1159) | Send Message
     
    My thoughts exactly. Either they think the momentum is there to get to those numbers, or they have decided QE does more harm than good. I suspect the latter.
    8 Jun 2013, 11:09 AM Reply Like
  • Jason Tillberg
    , contributor
    Comments (1267) | Send Message
     
    Seems to me what's been met is interest rates are soaring.
    8 Jun 2013, 10:51 AM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    The argument was made yesterday, in an SA comment, that ending QE doesn't matter, because all it did was pile up excess bank reserves at the Fed. As David Fry observed, no new loans or investments were created by quantitative easing. Banks were content to receive risk-free interest on those excess reserves. MBS purchases soaked up impaired paper and strengthened bank balance sheets. If we believe that banks have halted or vastly reduced their leveraged prop trading desk activities, then QE itself has not goosed the stock market higher. That's obviously untrue, but let's let it pass for the moment. JPM's London Whale lost $8 billion..

     

    An alternative explanation for the inexplicable, unbroken stock market rally since commencement of QE points to share buybacks and creative accounting gains from reduction of loan loss reserves at the banks. Maybe some of that is true. It doesn't explain the secular almost parabolic upward channel. Nor is HFT quote stuffing as effective as it used to be.

     

    I think what has happened is "crowding in." ZIRP is a huge disincentive to save. Regardless of official CPI, investors see rising cost of food and fuel. Gold and silver have been hammered. The only way to put money aside for retirement seems to be the stock market, and retail investors are piling in. Foreign investors and hedge funds probably started the rush to buy US equities last year. I haven't looked for hard data to verify it. Just an intuition.

     

    Bottom line: there is no "recovery" and Bernanke is worried about inflation.
    8 Jun 2013, 11:10 AM Reply Like
  • wmateri
    , contributor
    Comments (554) | Send Message
     
    A von A - I commented elsewhere that SA's Colin Lokey has done some brilliant articles on how Fed money indirectly (but powerfully) feeds the equity markets (see "http://seekingalpha.co..." for the latest one). I think it is fairly clear that directly, indirectly, or only by inuendo the Fed has been feeding the market throughout the various QEs. The markets accordingly went up with little or no basis in the fundamentals. Similarly, when the Fed stimulus is removed the market will go down just as illogically, even though the fundamentals are improving.
    8 Jun 2013, 11:28 AM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    @ AvA:
    The carry trade from Japan put plenty of hot money flows into our markets, and will continue to do so. Foreign flows have been obvious from gap up on open days in the market, and there have been many of them - this is also evident in the overnight futures.
    There are direct links between excess reserves and asset price inflation.
    Don't overestimate the participation from the little guy - he's been clobbered twice on bull traps and won't be coming back a third time for more.
    8 Jun 2013, 11:47 AM Reply Like
  • Vuke
    , contributor
    Comments (1666) | Send Message
     
    Taper can mean what you want it to mean..... BB is deflecting criticism while lessening concerns.

     

    Ta┬Ěper [tey-per]
    verb (used without object)
    1.to become smaller or thinner toward one end.
    2.to grow gradually lean.

     

    verb (used with object)
    3.to make gradually smaller toward one end.
    4.to reduce gradually.

     

    noun
    5.gradual diminution of width or thickness in an elongated object.
    6.gradual decrease of force, capacity, etc.
    7.anything having a tapering form, as a spire or obelisk.
    8.a candle, especially a very slender one.
    8 Jun 2013, 12:38 PM Reply Like
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    The whole thing is crazy and makes no sense. The conditions for cutting QE were set on day 1: unemployment at 6.5% and inflation above some level (which I forget). These set conditions change everyday now, depending on who talks about it. It is a total mess.
    8 Jun 2013, 12:53 PM Reply Like
  • mobyss
    , contributor
    Comments (2180) | Send Message
     
    Those were the conditions for ending QE. 6.5% UE and 2.5% CPI.

     

    They need to go from $85B a month to $0 a month, and it might take a year or more to get there.

     

    "The Great Wall Street Puppet Taper"
    8 Jun 2013, 03:54 PM Reply Like
  • Kyle Spencer
    , contributor
    Comments (1186) | Send Message
     
    Tapering in summer would be the height of stupidity given the typically lower volume and higher energy prices. I have no doubt that the WSJ wants a summer taper, I just don't see how they're going to get one while the fiscal hawks are getting many of their core arguments hammered on a daily basis by macroeconomic malpractice in Europe and IMF backtracking on Greece.
    8 Jun 2013, 04:03 PM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    The problem is junk http://bit.ly/11nWNHI and lack of good collateral.
    8 Jun 2013, 04:07 PM Reply Like
  • tradewin
    , contributor
    Comments (658) | Send Message
     
    Tapering is going to happen. WisGuy is right, no one knows exactly when or how much. And the markets have overreacted. The Fed is presented with a situation of how to ease out of this. There is no major crisis looming on the horizon, such as a war, and inflation is a disease.
    9 Jun 2013, 12:14 AM Reply Like
  • wmateri
    , contributor
    Comments (554) | Send Message
     
    On the other hand if you first make a lot of noise about tapering and let the market get a bit shaken then recover, maybe there's a chance that it will get used to it and stop being overly sensitive. This could be the way the Fed is thinking but they could be misreading how much of an effect their activities had on the markets on their way up. If the Fed truly believes that the S&P is where it is now on the basis of huge improvement in fundamentals, they could be misreading how little or how much it will fall once the juice is removed (or even reduced). But the first bit of tapering (or just the talk about it) will give them a measure. If you don't want QE to end ever then you better react harshly to any tapering or rumors thereof.
    9 Jun 2013, 12:27 AM Reply Like
  • tradewin
    , contributor
    Comments (658) | Send Message
     
    You're thinking too hard wmateri. Don't try to outguess the Fed.
    9 Jun 2013, 12:39 AM Reply Like
  • wmateri
    , contributor
    Comments (554) | Send Message
     
    Who's trying to outguess them. They said they will be much more open in communicating which way they are going. I'm just listening to what they are saying and, maybe, trying to figure out why they're saying it now. I wouldn't try to out-think them because that would presume they are actually thinking rather than just tinkering; I don't believe they have any more clue how this will all turn out than I do. They just have more money to play with.
    9 Jun 2013, 12:49 AM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    I'm not sure that there's anything to outguess. The Fed is basically paralyzed, having done something so incredibly stupid and irreparable that there's no way out, like painting oneself into a corner with poisonous naval jelly that will never dry. ZIRP was stupid, TARP was stupid, and QE is abject folly, no different than Japan's Lost Decades (plural). If the Fed stops monetizing Treasurys, who is going to fund the US government deficit spending and unfunded entitlements? China? Hah.
    9 Jun 2013, 12:55 AM Reply Like
  • tradewin
    , contributor
    Comments (658) | Send Message
     
    I think you are absolutely right. They don't know with any degree of certainty. They are however, being cautious. You and I can't print money.
    9 Jun 2013, 12:56 AM Reply Like
  • Retired User
    , contributor
    Comments (1803) | Send Message
     
    "You and I can't print money."

     

    Au contraire. Companies print money when they sell bonds. Private equity prints money when they do an LBO. Banks print money when they lend. Fannie and Freddie and the FHA print money. Your broker prints money with margin accounts. Vacuum tube algos print money when they stuff quotes, bidding up the market. Credit card companies and automakers print money when you buy stuff you can't pay cash for. States and municipalities print money when they float another IOU against future tax revenue.

     

    Base money is a pittance compared to private money creation.
    9 Jun 2013, 01:19 AM Reply Like
  • tradewin
    , contributor
    Comments (658) | Send Message
     
    Issuing debt and printing money are two different things. The gov't does it, currently creating a hidden tax. Credit markets in the public sector do not.
    9 Jun 2013, 02:27 AM Reply Like
  • apppp
    , contributor
    Comments (382) | Send Message
     
    How does this guy do it. He seems to know what the fed is thinking before they do, its as if he's a puppet.
    9 Jun 2013, 04:58 PM Reply Like
  • Philip Mause
    , contributor
    Comments (3807) | Send Message
     
    No inflation, dollar at very high levels, declining manufacturing, unemployment rate up month to month........
    I doubt that they will signal tapering. They may provide more of a "signal" concerning what will constitute a "signal" of tapering, but I wouldn't even put an even money bet on that.
    9 Jun 2013, 05:35 PM Reply Like
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